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AT&T Expected To Announce Low-Cost Picture Phone

January 3, 1992

NEW YORK (AP) _ A generation after making the promise, AT&T on Monday will announce a low- cost phone able to send moving pictures of callers as well as their voices, industry sources and analysts said Thursday.

The system will incorporate a small color screen and a video camera in a desktop telephone, analysts believe, and will be priced under $2,000.

That would be vastly cheaper than other video phone systems on the market, which start at about $20,000.

The more expensive systems display images on a large television screen and are designed for conference calls, while the AT&T device would only allow one caller to talk to and view another, said analyst Tim McElgunn of Datapro Research.

Several companies have introduced desktop phones in recent years that send a snapshot of the caller but can’t produce motion pictures.

American Telephone & Telegraph Co. has scheduled a news conference for Monday to announce a product, but wouldn’t elaborate.

AT&T first displayed a picture phone to millions of Americans at the 1964-65 World’s Fair in New York City. But it never delivered a small desktop device like the one shown. Instead, it developed expensive videoconference rooms for corporations that use special phone lines.

In the past few years, the charges for the high-capacity digital phone lines needed for picture phones have dropped to the point where they are affordable for many more users.

However, AT&T’s new phone is believed to use standard analog phone lines like those found in houses, said Ron Taylor, a spokesman for PictureTel Corp., a major maker of videoconferencing equipment.

PictureTel doesn’t view the AT&T product as competition because it is aimed at homes and small businesses, Taylor said, while PictureTel’s gear is used by large corporations.

In addition, he said, AT&T’s phones won’t work with any other video phone on the market today.

Because video contains much more electronic information than voice, it must be electronically ″compressed″ to send it over phone lines. AT&T has been working with Compression Labs Inc., a maker of videoconferencing equipment, to advance that technology.

The trick in cutting the cost of picture phones is reducing the number of computer chips needed for compression, analysts said.

Despite the drop in price, McElgunn was skeptical about whether the market was ripe for the AT&T product.

″In 1992, with 7 percent unemployment and people chopping costs all around, I don’t know,″ he said.

But Joseph Bellace, a Merrill Lynch & Co. analyst, said, ″The more you bring the price down the more you expand the market opportunity.″

McElgunn said he believed AT&T wanted to unveil its new phone in advance of several low-cost, personal computer-based video phone products expected to be announced shortly. In these, the video of a caller would appear in a window on a computer screen.

In addition, the industry’s annual showcase, the Consumer Electronics Show, opens later next week in Las Vegas.

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